Since it was announced last year, the UK government has been reviewing the management of local government pensions. The government is looking to make reforms in three areas around assets held by the fund, investment in regions, as well as improving the governance of pension funds with plans to move to a new model by March 2026.
The Merseyside Pension Fund currently has around 140,000 pension fund members. Pension fund members include the five Merseyside councils Knowsley, Liverpool, Sefton, St Helens, and Wirral as well as other organisations like the Merseyside Fire and Rescue Service and Merseytravel.
One of the concerns raised by councillors was about the possible impact these changes could have on local investment as the Merseyside pension fund is managed more regionally with pension funds in Manchester and West Yorkshire.
Conservative councillor Cherry Povall said she felt the changes were a major crossroads for Pensions, adding: “We are losing control of what goes on in our fund […] we are not going to have the same control over our assets as what we’ve got currently.”
She felt decisions would end up being made by a pensions board in Manchester or Sheffield telling the committee: “I do think the government is laying the groundwork so any excess money from our pool can be grabbed and used for something else and I think we are gradually going to lose control over everything.”
Cllr Povall said they needed to make sure there would be someone on the board fighting for Merseyside’s interests. Peter Wallach, the fund’s pensions director, said it would be important for the committee to scrutinise the plans going forward as well as set out any red lines it may have such as keeping jobs locally.
Green councillor Pat Cleary raised concerns about the future of local investment and how it would be decided going forward, especially if it led to less investment in the local area. Mr Wallach said investment could vary between areas going forward but there was a possibility Merseyside funds could just be invested within the region.
However, given there were only two other regions in the pension pool at this point in time, he said this meant Merseyside would have more negotiating power “but you’re quite right there is a risk that local investment gravitates towards Manchester.”
Conservative Cllr Jeff Green felt “the government has seen a large pot of money […] and the chancellor has needed capital investment in the economy so where can I find some capital from? I know all those pensions funds have got it.” He said he was frustrated the changes were happening when the fund was doing well.
However, Labour councillor Ruth Bennett argued “using funds more strategically across the North is not a bad thing, I think we should look at our potential opportunities.” She said she had concerns about democratic and councillor oversight of the pension fund going forward, to which councillors were told more guidance was expected in the future.
Later in the meeting, it was revealed the pension fund has dis-invested in American defence and aerospace manufacturer Lockheed Martin. Cllr Pat Cleary said this due to a treaty around cluster munitions where smaller bombs are dropped over a wide area.
Mr Wallach said they would continue to have an up to date list of proscribed companies and said investments were based on scores based on a number of factors, not personal opinion. Earlier in the meeting, it was revealed the pension has also pulled out of investing in Elbit Systems, a defence contractor company.
The issue of pension fund investments has prompted regular protests from the Liverpool Friends of Palestine as well as unions like Unison. At a protest outside the meeting on June 23, Mal Ferguson, branch secretary for the Unison branch for the city region and Merseytravel, told the LDRS: “Once our members learned about what it’s paying for they were outraged. They just want them to stop investing in it.”
In a public question to the committee, Vicky Jackson, also a member of the union, said she was disgusted about the use of the funds asking “are we now also complicit in war crimes if we do not divest?”
Chair of the committee Cllr Brenda Hall said a shareholder was not responsible for the actions of a company they invest in or their customers. She said any action taken would have to have the support of pension fund members and wouldn’t significantly hurt the pension fund.
Mike Hogan pointed to an Opinium poll that found a majority of people supported an arms embargo and raised concerns about “the mental health problems that [not pulling out] is going to produce from members of the scheme.” Cllr Hall said the issue of any embargo was different from any pension fund investment, adding investments could also take into account securing the defence of the UK as well as NATO members.